This study investigates the moderating impact of governance on the relationship between economic complexity and quality of life (QoL) in 75 developing countries from 2011 to 2021. Using the economic complexity index (ECI) and the social progress index (SPI), and employing a system-GMM approach, the study finds that both economic complexity and governance improve QoL. Governance significantly modulates the effect of economic complexity on QoL, with government effectiveness, rule of law, and control of corruption being particularly important. A threshold analysis identifies critical governance levels beyond which complementary policies are needed to sustain the positive impact on QoL. The findings offer insights into complementary policies for leveraging economic development to improve well-being in developing countries.

Eslam A. Hassanein, Nagwa Samak, Salwa Abdelaziz